Public Stock Ownership by Giacomo Corneo :: SSRN

February 23, 2019

The government of a country with a good financial reputation could borrow from the international capital market and use the proceeds to endow a sovereign wealth fund that mainly invests in the world stock market. In expectation, this country would gain the equity risk premium multiplied by the size of the fund. This gain could be earmarked to a social dividend. This paper deals with the conditions under which such a policy is welfare‐improving, discusses the optimal size of such a fund, and proposes an institutional framework for the management of public stock ownership.

Source: Public Stock Ownership by Giacomo Corneo :: SSRN


Welfare Reform and the Labor Market by Marc K. Chan, Robert A. Moffitt :: SSRN

September 18, 2018

This article reviews the basic theoretical models that are appropriate for analyzing different types of welfare reforms, as well as the related empirical literature. We first present the canonical labor supply model of a classical welfare program and then extend this basic framework to include in-kind transfers, incomplete take-up, human capital, preference persistence, and borrowing and saving. The empirical literature on these models is presented. The negative income tax, earnings subsidies, US welfare reforms with features that differ from those in other countries, and childcare reforms are then surveyed in terms of both the theoretical models and the empirical literature surrounding each.

via Welfare Reform and the Labor Market by Marc K. Chan, Robert A. Moffitt :: SSRN


The End of the Ramen Diet: Higher Education Students and SNAP Benefits by Erika Dunyak :: SSRN

September 18, 2018

Americans joke that college students have so little money that they subsist on 10 cent packs of ramen. Statistically, college students face much higher rates of food insecurity than the general population and the situation is particularly dire for students of color. Much has been written on this area in recent months and years and many commentators are seeking to denormalize poverty, hunger, and the “freshman 15” on campuses. This article will look to a solution for this hungry and often neglected population. In 2010, the Health, Hunger-Free Kids Act (HHFKA) reauthorized the Federal School Lunch Program. HHFKA contained several innovations, however, one that is particularly relevant is the “identified students” provision. Under this scheme, students whose families already receive Supplemental Nutrition Assistance Program (SNAP) benefits, Medicaid, or are enrolled in several other federal assistance programs qualify for free or reduced-price school meals without a separate application. With the next iteration of the Farm Bill, SNAP should be adjusted to similarly accommodate low income college students. Under this new program, students who qualify for Perkins Loans, Federal Work Study, Pell Grants, Federal Supplemental Educational Opportunity Grants, and similar federal programs would also receive SNAP benefits without an additional application. The benefits to such a program would be tremendous. In many states, college students are specifically excluded from receiving benefits such as SNAP and Medicaid. This policy change would move students away from food insecurity, reduce the burden of schools providing high quality dining experiences that are a major contributor to the cost of higher education, reduce student debt, and bring the political capital of university students to SNAP.

via The End of the Ramen Diet: Higher Education Students and SNAP Benefits by Erika Dunyak :: SSRN


Hashing it Out: Blockchain as a Solution for Medicare Improper Payments by William J. Blackford :: SSRN

September 18, 2018

Part I highlights the inadequacies and inefficiencies of our Medicare payment system, focusing on the initiatives currently in place and the susceptibilities that persist. Part II offers a broad overview of the development, importance, features, and collateral technologies surrounding blockchain. Part III posits that Congress and HHS, through its various subsidiary agencies, should work in tandem with private stakeholders to create and/or implement a blockchain-based infrastructure to facilitate federal healthcare payments and support future growth of quality-based initiatives. This Note concludes with a recommendation for future agency research focusing on the viability and cost efficiency of a blockchain solution.

via Hashing it Out: Blockchain as a Solution for Medicare Improper Payments by William J. Blackford :: SSRN


A Meta-Analysis of the Decline in the Labor Force Participation Rate by Ananth Seshadri :: SSRN

September 16, 2018

This project explores the causes behind the recent decline in the Labor Force Participation (LFP) rate. The analysis examines the evolution of the LFP rate for different demographic groups to gauge the effect of demographic changes. An integral part of the project is an investigation of the flows of workers into and out of the labor force to determine whether the LFP rate has been declining because more workers are leaving or because fewer workers are entering the labor market. The project also studies the evolution of wages and finds that the decline in the LFP rate is often accompanied by a declining real wage, which is indicative of the relative importance of demand versus supply factors.

via A Meta-Analysis of the Decline in the Labor Force Participation Rate by Ananth Seshadri :: SSRN


Understanding the Aggregate Effects of Disability Insurance by Soojin Kim, Serena Rhee :: SSRN

September 16, 2018

We study the aggregate consequences of the Social Security Disability Insurance (DI) program, focusing on the role of complementarity between heterogeneous human capital. First, we develop and estimate a wage process in which individuals’ human capital is composed of (pure) labor and work experience, and the two inputs are (differentially) affected by disability. We find that older workers are more experience-abundant and that disability causes a smaller loss in experience than it does in labor. Based on the estimates, labor and experience are complementary inputs in aggregate production. Combining these results with a structural general equilibrium model, we conduct quantitative analyses and find that the removal of DI increases the relative supply of experience, as more old individuals work. This compositional change in labor and experience lowers the labor productivity (despite higher employment and output) in the economy without DI, due to the complementarity between the two inputs.

via Understanding the Aggregate Effects of Disability Insurance by Soojin Kim, Serena Rhee :: SSRN


EBRI Retirement Security Projection Model®(RSPM) – Analyzing Policy and Design Proposals by Jack VanDerhei :: SSRN

September 15, 2018

At various times, policymakers have sought to improve the defined-contribution system by increasing the number of workers who have access to the system and by seeking ways to keep money in the system until workers retire. Conversely, motivated by budget concerns, they have also sought to reduce tax deferrals from the system by limiting pretax contributions through caps and other mechanisms.

Such policymaking can lead to unintended, and undesirable, consequences if it is not informed by sound research. The Employee Benefit Research Institute (EBRI) originally developed its Retirement Security Project Model® (RSPM) with the goal of providing just such insight for policymakers. Using assumptions based on actual, anonymized administrative data from tens of millions of 401(k) participants, RSPM® has been used to simulate the percentage of the population at risk of not having retirement income adequate to cover projected expenses under the current system since 2003. More critically, it can be used to examine the impact of potential changes to the 401(k) system — such as those proposed by policymakers.

In this Issue Brief, we will examine the impact of various retirement-reform proposals on all US households between the ages of 35 and 64 by first assessing the current, aggregate national-retirement deficit, and then examining the impact of the following potential initiatives:

– Auto Individual Retirement Account (IRA) programs, such as the one proposed under President Obama’s 2015 Budget.

– Programs expanding access to defined contribution plans, such as the Automatic Retirement Plan Act of 2017 (ARPA) proposal.

– A universal defined-contribution scenario.

– Auto-portability proposals.

– Proposed reductions in the 402(g) and/or 415(c) limits.

Note: RSPM® incorporates a definition of retirement income adequacy that is far more comprehensive than most models today. In RSPM®, a household is considered to “run short of money,” or to experience a retirement savings shortfall, if its resources in retirement are not sufficient to meet average deterministic retirement expenditures plus uncovered long-term care expenses from nursing homes and home health care.

Key findings from this RSPM® analysis are:

– It is projected that 57.4 percent of all US households – including those covered by employer-sponsored retirement plans and those who are not – will achieve retirement success and will not run short of money in retirement. But that means that nearly 43 percent of households will not achieve retirement success according to the model, though some may fall short by relative small amounts.

– However the probability of a successful retirement depends to a great extent on whether employees are eligible to participate in a defined contribution (DC) plan. For example, among Gen Xers, those with no future years of eligibility are simulated to have only a 48 percent probability of not running short of money in retirement. In contrast, those who have 20 or more years of future eligibility (this may include years in which employees are eligible but choose not to participate) are simulated to have a 72 percent probability of achieving a successful retirement and not running short of money.

– This translates into an aggregate national retirement savings shortfall of $4.1 trillion. The deficit averages nearly $90,000 for workers ages 35-39 who currently do not have and are not projected to gain access to the defined-contribution system. In contrast, for those fortunate enough to spend much of their working lives eligible for participation in the defined-contribution system, the projected deficit is less than a quarter of that amount.

– Long-term care costs must be considered if an accurate picture of retirement income adequacy is to be gained. Failing to incorporate long-term care costs into the model significantly changes the probability of not running short of money in retirement — increasing it by nearly a quarter.

– Various reform scenarios could reduce the retirement deficit by as much as 802 billion, or 19.4 percent.

– Eliminating pre-retirement cashouts would enable an additional 20 percent of low-income workers currently ages 25–29 who will have more than 30 years of simulated eligibility for participation in a 401(k) plan to attain an 80 percent real replacement rate from Social Security, 401(k) plan balances and IRA rollover balances that originated in 401(k) plans. It should be noted, however, that these results do not consider any potential reduction in contributions on behalf of workers who might, knowing that monies would not be available for hardship situations, decide to reduce, or even cease contributing to these plans.

– Reducing current contribution limits could significantly reduce projected account balances for certain workers

via EBRI Retirement Security Projection Model®(RSPM) – Analyzing Policy and Design Proposals by Jack VanDerhei :: SSRN